Chrysaor to acquire ConocoPhillips’ UK oil and gas business for $2.675 billion

Chrysaor E&P Ltd. has agreed to purchase the United Kingdom oil and gas business of ConocoPhillips for $2.675 billion, increasing Chrysaor’s pro forma 2018 production to 177,000 boe/d to become one of the largest oil and gas producers in the UK North Sea.

Apr 18th, 2019

Chrysaor E&P Ltd. has agreed to purchase the United Kingdom oil and gas business of ConocoPhillips for $2.675 billion, increasing Chrysaor’s pro forma 2018 production to 177,000 boe/d to become one of the largest oil and gas producers in the UK North Sea.

The privately-owned operator is acquiring two UK subsidiaries that, together, indirectly hold the exploration and production assets of ConocoPhillips in the UK, as well as an ongoing decommissioning program in the UK Southern North Sea, which Chrysaor expects to have materially completed by 2022. ConocoPhillips will retain its London-based commercial trading business and its 40.25% interest in and operatorship of the Teesside oil terminal.

With the deal, Chrysaor gains two new operated hubs in the UK Central North Sea, Britannia and J‐Block, as well as an interest in the BP-operated Clair field area in the West of Shetlands area offshore the UK.

In addition to the associated oil and gas reserve base, Britannia and J-Block have access to contingent resource potential providing near field opportunities for production growth and reserve replacement, Chrysaor said in a press statement. This interest and Clair field’s prospects for future additional development complement Chrysaor’s existing West of Shetlands position in Schiehallion field, the company said.

Full-year 2018 production and year-end 2018 proved reserves associated with UK assets were 72,000 boe/d and 99 MMboe, respectively. As of the effective date, ConocoPhillips UK assets contain over 280 MMboe proved and probable (2P) oil and gas reserves with a further contingent resource base. Including the assets acquired from ConocoPhillips, as of Jan. 1, Chrysaor’s pro forma 2P reserves total over 600 MMboe. Pro forma production in 2019 is expected to increase to over 185,000 boe/d.

"These assets complement our existing operations and, with operating costs at less than $15 per barrel across the enlarged group, our portfolio delivers high margins and significant positive cash flow. In the Central North Sea, we will own a range of operated hub infrastructure providing access points in an area with the largest undeveloped contingent and prospective oil and gas resource base in the UK. In the West of Shetlands region, we have secured long life cashflows from two world‐class fields operated by BP. Chrysaor’s West of Shetlands position also provides exposure to a developing region with significant interest and momentum from major oil companies. We will seek to build on that through the acquisition of additional interests and acreage," said Phil Kirk, Chrysaor chief executive.

Chrysaor is backed by Harbour Energy, a permanent capital energy investment company managed by EIG Global Energy Partners. Chrysaor will fund this acquisition from existing cash resources and an upsized $3 billion Reserve Based Lending debt facility underwritten by Bank of Montreal, BNP Paribas, DNB Bank, and ING Bank.

Subject to regulatory approval and conditions, the sale is expected to close in this year’s second half with an effective date of Jan. 1, 2018.

Contact Mikaila Adams at mikaila@pennwell.com.

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