The Gina Krog development (illustration: Statoil)
Sequa Petroleum N.V. reports that its planned acquisition of a 15% interest in Gina Krog, announced in October 2015, has received all necessary government approvals, and the Sequa’s100% subsidiary Tellus Petroleum A.S. has been approved as a new Norwegian Continental Shelf’s licence holder.
The Gina Krog development, operated by Statoil, is currently within budget and on schedule for first production in Q2 2017. In light of the current industry environment, cost reductions and schedule improvements of the Gina Krog project are currently being pursued.
The 2P reserves are estimated at approximately 260 million barrels of oil equivalent, of which 39 million boe are net to Sequa Petroleum. OPEX and CAPEX costs are both estimated at approximately USD 15 per boe. These estimates are calculated over the field life, from the effective date of 1 January 2015 (being the effective date of the Sequa’s acquisition), representing a low marginal cost.
The transaction terms for the acquisition of Gina Krog, announced on 19 October 2015, are at an attractive discount to comparable transactions in Norway. These terms result in all-in costs until first production of approximately USD 9 per boe of 2P reserves. The seller will retain the tax balances related to the Gina Krog investments prior to the effective date.
Sequa believes that Norway provides the world's most secure and stable operating environment for oil and gas. Norway boasts a strong AAA rated sovereign government that actively encourages and incentivises the industry, and is isolated from geopolitical crises. The Norwegian petroleum tax environment provides unparalleled downside protection, by giving companies the potential to recover up to 94% of their development costs.
Sequa is planning to finance the Gina Krog transaction with a combination of equity raised by the Sequa and of debt raised by both Sequa and Tellus. Sequa expects to complete the Gina Krog transaction in April 2016.