EnQuest Farms Out Alma/Galia Stake
EnQuest PLC announced an agreement with the Kuwait Foreign Petroleum Exploration Company (KUFPEC), by which EnQuest will farm out a 35 percent interest in EnQuest's Alma and Galia oil field developments (Alma/Galia) to KUFPEC. Under the agreement, which is subject to regulatory approvals, KUFPEC is to invest a total of approximately $500 million in cash (around GBP 300 million), comprised of up to $182 million in future contributions for past costs and a development carry for EnQuest, and of KUFPEC's direct share of the development costs.
"EnQuest is pleased to be working with KUFPEC again and to have them as our partner in the Alma/Galia development. With start up planned for late next year, the project team is well advanced in the execution phase and our first Alma well has reached 'TD' (total depth) with good results," said Chief Executive Amjad Bseisu.
"In keeping with KUFPEC's strategic objective to acquire quality production and reserves, we are pleased to re-enter the North Sea through EnQuest's Alma and Galia project. The North Sea transaction flow activity affords KUFPEC an opportunity to grow a material business through alignment with valued partners such as EnQuest," said Chairman & Managing Director of KUFPEC Nizar M. Al-Adsani.
Chief Secretary to the Treasury Danny Alexander, said: "This is good news for North East Scotland and the whole of the UK. At the Budget, the Government set out ambitious measures to stimulate billions of pounds of new investment in the North Sea, increasing production and creating jobs. Today's deal between EnQuest and KUFPEC, bringing up to £300 million of foreign investment into the North Sea, proves that the UK continental shelf remains an attractive prospect. The Government will continue working with the industry in the North Sea to get the most of what is a huge national asset."
Further details of the transaction
KUFPEC will pay its pro rata share of costs effective from January 1, 2012 and will also pay up to $182 million in future contributions for past costs and development carry, in relation to EnQuest's remaining interest in Alma/Galia. The capital cost of the project is being revised to include some additional costs relating to increased scope, intended to extend the life of the oil field. EnQuest anticipates costs of the development of approximately $1 billion. If KUFPEC does not recover its costs by January 1, 2017, then it will receive 50 percent of revenue less operating costs until those costs have been recovered.
EnQuest Alma/Galia net production post this transaction's completion
EnQuest previously announced that it anticipated peak production of over 20,000 barrels of oil equivalent per day (boepd) from Alma/Galia, following first oil, expected in 4Q 2013; this was based on EnQuest having a 100 percent interest in Alma/Galia. Whilst the farm out significantly enhances the economics of the project, by farming out 35 percent of the gross production EnQuest will therefore reduce its net production, by approximately 7,000 boepd in 2014 and by approximately 1,750 boepd in 2013. EnQuest's overall company net production outlook will similarly be reduced.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Blockchain Demands Attention in Oil and Gas
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- CNPC Opens Sea-Land Oil Storage and Transport Facility in Bangladesh
- US Govt Makes Record Investment of $6B for Industrial Decarbonization
- Perenco Still Searching for Missing Person After Platform Incident
- Eni, Fincantieri, RINA Ink Deal on Maritime Decarbonization
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Oil Falls as US Inventories Increase
- Czech Utility CEZ Bucks Weaker Prices, Demand to Log Record Annual Profit
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- UK Grid Operator Receives Aid to Advance Rural Decarbonization
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call