The latest step in the transaction was first announced last month.
As a result of the exercise, EnQuest is to receive $20mln in cash from BP, due to EnQuest taking on additional decommissioning obligations (increasing to 7.5% from 4.5%) as it ups its ownership stake in the assets.
The company added that the cap on EnQuest’s total payment obligation also increases by £42mln to £99mln.
It expects to receive the $20mln payment from BP within ten business days.
The completion of the Magnus transaction is, meanwhile, due by the end of this year subject to regulatory and third-party consents.
EnQuest highlighted that the deal will add around $500mln to the group’s net asset value, whilst it will increase both the reserves base and production volumes.
Taking control of Magnus
In January 2017, the oil firm agreed on a deal with BP to acquire 25% of the Magnus, Thistle and Deveron fields – together referred to as the Magnus acquisition – and, it also received a right to acquire more of the project.
The option has now been exercised and will give the EnQuest the remaining 75% of the assets, at a cost of US$300mln which will be covered partially by a cash flow sharing agreement between EnQuest and BP. A US$100mln cash consideration will be paid.
Notably, the ‘economic date’ of the transaction date is set to 1 January 2017 and as such the cash flows attributable to the 75% will be adjusted in the respective company accounts, and, will alter the base consideration and the amount in the financing arrangement.
EnQuest’s decision to take full ownership comes after successful new drilling in 2018, in which it completed the M-62 and M-63 wells, which has given confidence that it can drill effective, low-cost wells on the fields. It intends to spend US$27mln to drill wells at Magnus and the Canute development area.