Serica Energy acquires 18% interest in North Sea Erskine field from BP

Published Jun 8, 2015
Serica Energy

Serica Energy plc is pleased to announce that the transaction to purchase an 18% interest in the producing North Sea Erskine Field from BP was completed on 4 June 2015. As a result Serica has acquired an 18% interest in UK blocks 23/26a (Area B) and 23/26b (Area B) containing the Erskine Field, located in the UK Central North Sea, from BP Exploration Operating Company Limited and Britoil Limited both wholly owned subsidiaries of BP plc.

Highlights •The transaction provides Serica with an immediate and long term cash flow stream •Approximately 3.3 mmboe of producing, proven and probable reserves added at completion at a cost per barrel of approximately US$4.0 •The effective date of the transaction is 1 January 2014. Adjustments for net revenue, associated liabilities and partial deferment of consideration have resulted in Serica receiving approximately US$9 million cash on completion •13.5 million shares in Serica have been issued to BP who will now hold approximately 5% of Serica's enlarged issued share capital. BP has agreed to hold the shares as an investment for a period of not less than one year •Provision for decommissioning at the end of field life has been provided for on the basis that Serica's estimate of decommissioning costs will be met by BP, with Serica being responsible for any costs above this level. BP responsible for decommissioning costs up to a gross £174 million (£31.32 million net to Serica) adjusted for inflation •Transaction very tax efficient for Serica - uses only part of its US$186 million ring fenced corporation tax losses leaving substantial losses available to Serica for future transactions •Provides export routes via CATS and Forties pipeline systems - additional benefits and synergies with Serica's Columbus field interest •Field production has recently recommenced following prolonged shutdown for major infrastructure improvements downstream. Facilities are being re-commissioned and production is expected to build over coming months •55,000 barrels of Serica's forward entitlement from Erskine condensate production were sold in 2014 at prices considerably in excess of today's spot prices (2014 average sales price of $100 per barrel) thus insulating Serica from the impact of lower oil prices over recent months for this production volume

Tags: BP PLC, Serica Energy plc


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