www.nauticalpetroleum.com
Nautical Petroleum plc intends to become a significant producer of heavy oil, initially in the UKCS and in North West Europe. Primarily it will acquire, appraise and develop discovered heavy oil reserves and secondly secure exploration acreage with limited work commitments.
Nautical Petroleum sells 25 pct of Kraken field to EnQuest for US$240 mln
AIM quoted Nautical Petroleum (LON:NPE) has agreed to sell a 25 per cent stake in the Kraken oilfield to EnQuest (LON:ENQ).
The deal may be worth as much as US$240 million to Nautical as EnQuest will cover costs of the oilfield development.
The deal comes just two weeks after EnQuest entered the Kraken joint venture acquiring a 20 per cent stake from a minority partner for US$90 million.
"I am delighted to welcome EnQuest, as partners, strengthening the joint venture both technically and financially,” said Nautical chief executive Steve Jenkins.
"This transaction provides Nautical with a carry of up to $240 million on our remaining 25 per cent interest in Kraken, significantly mitigating our funding requirements for the development of the field.”
Subsequently EnQuest’s stake in the project rises to 45 per cent and it will become the operator, while Nautical will retain a 25 per cent stake alongside partner First Oil with the remaining 30 per cent.
The deal sees EnQuest make a firm commitment to cover US$150 million of Nautical’s costs in the field development and a further US$90 million will be available subject to 2P oil reserve volumes.
The field must have at least 100 million barrels of 2P reserves for the contingent payments to kick-in.
EnQuest is also acquiring interests in the surrounding exploration acreage, taking 15 per cent of blocks 3/22a and 3/26 as well as 10 per cent in blocks 9/6a and 9/7b.
Furthermore Nautical has given EnQuest an option to acquire a 45 per cent stake in the Ketos oil discovery. To acquire the stake it must pay 90 per cent of the costs of two appraisal wells.
A development at Ketos could potentially be tied back to the Kraken field should appraisal prove successful.
"EnQuest is very pleased to be able to increase its interest in Kraken and to become the future operator of the proposed development.
“Based on the operator's estimates, this 25 per cent interest in Kraken provides 40 million barrels of contingent resources, which when combined with the 32 million barrels of contingent resources from the 20 per cent interest that EnQuest acquired earlier this month from Canamens, adds almost 70 per cent to EnQuest's end 2010 contingent resources,” added EnQuest chief executive Amjad Bseisu.
Bseisu added: “With Nautical's background and deep expertise in this project, EnQuest is keen to combine forces and to jointly move forward what we believe to be one of the most exciting development projects in the UK North Sea."
Today’s deal is another clear sign of consolidation in the North Sea.
It follows yesterday’s news that Ithaca Energy (LON:IAE, CVE:IAE), which is developing the Athena field, has received a confidential proposal to buy the company. And Premier Oil’s (LON:PMO) acquisition of EnCore Energy (LON:EO.) for £221 million, which was agreed in October.
