Serica Energy Plc (LON:SQZ) has updated investors on geopolitical complications that potential impact its proposed acquisition in the UK North Sea.
The AIM-quoted oiler in November agreed the ‘BKR acquisition’ to buy stakes in the Bruce, Keith and Rhum fields from BP.
Global events since then - America’s withdrawal from the Iran action plan - could impact the deal as a subsidiary of the National Iranian Oil company holds a 50% stake in the Rhum field, and, consequently the North Sea asset could be affected by new US sanctions.
Serica, in its statement, noted that certain services that presently support the Rhum operations are provided under authorisations awarded previously by the US government, but, they are due to expire in September.
READ: Serica Energy to acquire BP’s stake in BKR fields
Meetings are due to take place with the US Office of Foreign Assets Control (OFAC) and new applications have been submitted to the US agency.
Serica also noted that it is working closely with the UK authorities and said it has the government’s support on all aspects.
Nonetheless, BP (acting as Rhum’s operator) has decided to defer planned field programmes which would’ve seen the recompletion of an existing well, on the basis that it needs to carry out the work to the ‘highest safety and environmental standards’. In the meantime, BP awaits clarity on the position relating to US sanctions.
Serica told investors that it remains committed to completing the BKR acquisition in the third quarter of this year, and, it believes that the deferral of the field work won’t impact the long-term recovery of Rhum reserves.
Mitch Flegg, Serica chief executive, said all aspects of completing the deal remain on track.
"As a British company working to maximise the full recovery of Britain's gas reserves in line with OGA and UK Government policy, we will be working with our partners and the UK Government to identify measures, acceptable to the US authorities, to protect safe and efficient Rhum operations and ensure maximum economic recovery of reserves from this valuable UK resource,” Flegg added.
“We are receiving full support from all the relevant UK authorities in these efforts.”
Serica shares were down just over 3% in Tuesday Morning’s trade, changing hands at 68.20p.