Serica due BP stakes in three fields off UK

Nov. 21, 2017
Serica Energy PLC, London, has agreed to buy interests in three natural gas and condensate fields in the northern UK North Sea from BP PLC and become operator. 

Serica Energy PLC, London, has agreed to buy interests in three natural gas and condensate fields in the northern UK North Sea from BP PLC and become operator.

It will pay £12.8 million, adjusted for working capital, plus as much as £39.1 million contingent on production and prices for 36% of Bruce field, 34.83% of Keith field, and 50% of Rhum field. BP also will receive a share of any positive pretax net cash flow from the fields of 60% in 2018, 50% in 2019, and 40% each in 2020 and 2021.

BP retains liability for decommissioning costs, less 30% to be paid by Serica net of tax relief. BP agreed to buy Serica’s share of production from the acquired assets on market terms.

BP Gas Marketing Ltd. agreed to provide Serica a prepayment facility of up to £16 million to cover hedging instruments bought by Serica in conjunction with the agreement.

Serica estimates proved and probable reserves net to the interests it is acquiring at 4.994 million bbl of oil and other liquids and 264.258 bcf of natural gas.

According to the Oil and Gas Authority, Bruce field recently produced 2,250 b/d of oil and 73 MMscfd of gas gross. It has three bridge-linked platforms and a subsea manifold in 122 m of water 350 km northeast of Aberdeen. Production is from 21 wells.

Nonoperated Bruce interests after the acquisition will be Total E&P UK Ltd., 43.25%; BHP Billiton Petroleum Great Britain Ltd., 16%; Marubeni Oil & Gas (North Sea) Ltd., 3.75%; and BP, 1%.

Keith field, recently producing 970 b/d of oil and 3 MMscfd of gas gross, is a single-well subsea development in 120 m of water tied back to the Bruce complex 6.8 km to the northeast. It’s expected to cease production in 2019. Other interests are Total, 25%; BHP Billiton, 31.83%; and Marubeni, 8.34%.

Rhum field, 44 km north of Bruce field in 109 m of water, recently produced 1,560 b/d of oil and 154 MMscfd of gas. Production is from two wells, completed subsea in a high-pressure, high-temperature reservoir, flowing through a manifold tied back to Bruce facilities. The partners plan next year to reenter a third well, Rhum R3, which was not brought onto production because of complications during completion and hydrate formation.

Iranian Oil Co. (UK) Ltd. holds the other 50% Rhum interest.

The deal represents a reverse takeover for Senica under UK securities rules, making it subject to several conditions, including shareholder approval.

In conjunction with the acquisition, Mitchell Robert Flegg, who was chief operating officer of Serica Energy in 2011-15, returns to the company as chief executive officer and a director. He had been chief executive officer of Circle Oil PLC, which entered voluntary liquidation last February.

About 110 BP employees working on the acquired properties will be transferred to Serica.