EnQuest Farms in to the Bressay Development in the UK North Sea
UK-based independent EnQuest Plc has signed a sale and purchase agreement with Norwegian major Equinor ASA to acquire a 40.8125% operated equity interest in the Bressay oil field development project located in the northern UK North Sea.
The transaction consideration comprises an initial consideration of £2.2 million (approximately US$2.9 million) payable as a carry against 50% of Equinor’s net share of costs from the point EnQuest assumes operatorship of the project. In addition, EnQuest will make a contingent payment of at least US$15 million following approval of a Bressay Field Development Plan (FDP) by the UK’s Oil and Gas Authority (OGA). The contingent payment may increase to US$30 million if EnQuest sole risks Equinor in the submission of the FDP.
Under the terms of the agreement, EnQuest will also assume operatorship of the licences following the plugging and abandonment of the 3/28-1 well by Equinor. Following completion, Equinor have a reduced 40.8125% interest in the project, with a subsidiary of Chrysaor Holdings Ltd. holding the remaining 18.375%.
The Bressay oil field is located across four North Sea license blocks located East of the Shetland Islands in water depths of approximately 110 meters. The field was discovered in 1976, and is considered to be one of the largest undeveloped oil fields in the UKCS. The acquisition will increase EnQuest’s 2C contingent resources by approximately 65%, from 173 to 288 million barrels (MMbbls). EnQuest will look at a number of development scenarios, including a potential tie-back to its Kraken field, developed via the Armada Kraken FPSO.
“We are delighted we have agreed the acquisition of a material operating interest in the Bressay field and to partner with Equinor. With the addition of up to 115 MMbbls of net 2C resources, Bressay provides EnQuest an opportunity to demonstrate its proven capabilities in low-cost drilling, near-field and heavy oil development. The heavy oil skills and knowledge the group has acquired from Kraken will help us unlock the potential of this large 1 billion barrel oil in place field,” said Amjad Bseisu, Enquest’s CEO.
The completion of the transaction is subject to partner and regulatory approvals, as well as appropriate extensions to licence expiry dates and commitments, and is expected to be completed in Q4-2020.