It is acquiring an initial 25% stake in Magnus for US$85mln – to be paid out of Magnus’ future production cash flow – and it has an option to take up all of the field in the future.
At 25%, EnQuest will gain some 16mln barrels of reserves and 4,200 barrels of oil equivalent production.
"This transaction capitalises on EnQuest's strengths in realising value from the management of maturing oil fields, as underlined by BP's confidence in proposing a change of operatorship to EnQuest,” said Amjad Bseisu.
“Magnus is a good quality reservoir; it has large volumes in place, with potential for infill drilling and for the revitalisation of wells, and scope for field life extension.
“It is a producing asset that would materially increase EnQuest's reserve base.
“We are a natural strategic partner to BP for maturing assets and this innovative structure represents a natural evolution of EnQuest's business."
Bernard Looney, chief executive of BP Upstream, added: “As BP continues to focus its North Sea portfolio around assets where we can add new capacity through disciplined investment in major projects, it is essential to partner with experienced operators like EnQuest to extend the life of existing mature assets like Magnus and Sullom Voe for the benefit of both companies and the region as a whole."
There is also an option in the deal that would see EnQuest receive US$50mln in cash from BP, in return for EnQuest taking on the management of the physical decommissioning for Thistle and Deveron fields (presently 99% owned by ENQ and 1% by BP).
EnQuest separately gave a trading update in which it told investors that production for 2016 averaged 39,751 boepd, up 8.7% from the preceding year. North Sea output, meanwhile, was up 11.3% in the year.
It marked EnQuest’s best year of production since 2010, albeit the final figure for the year was impacted by the longer than anticipated maintenance shut-down on the Brent pipeline.
Looking ahead, the oiler forecasts production in the range of 45,000 to 51,000 boepd for 2017, subject to the timing of the Kraken field start up (guidance excludes the new 25% stake in Magnus).
EnQuest added that the floating production facility for Kraken arrived in the North Sea on schedule and it is on-track for first oil in the second quarter of this year.
At the end of 2016, EnQuest had US$1.8bn of net debt.