Bridge Buys Boa Field Stake

Bridge, the Oslo Axess-listed oil and gas exploration and production company has signed a Sale & Purchase Agreement to acquire a 1.55 percent working interest in the producing Boa field from OMV (U.K.) Limited for a consideration of $18.1 million (the "Transaction"). The interest will add production of 250 barrels of oil per day to Bridge. Bridge will fund the acquisition through current cash and its existing reserve based lending facility. No additional equity is required.

About the Boa field

The unitized field extends across the UK/Norway median line and lies 88.65 percent in Norway Block 24/6 and 11.35 percent in UK Blocks 9/15a and 9/15b. The field was developed in 2008 as part of the wider Alvheim area development with 3 subsea development wells tied back to the Alvheim FPSO operated by Marathon. Oil from Boa is shipped by shuttle tanker while gas is exported into the UK market via the Beryl SAGE system.

The Boa reservoir is contained within a very high quality upper Heimdal sand sequence and comprises a light oil rim with an overlying gas cap and very strong natural aquifer drive. The field had produced around 25 million barrels of oil up to the effective date and is currently producing over 16,100 barrels per day gross. The production performance of the field has exceeded expectation and recovery estimates have continued to increase during the field life. Potential for further infill drilling in the field has been identified as well as the development of the field gas cap. Both of these opportunities add material upside to the current recovery estimates.

In addition to Alvheim the FPSO processes oil from a number of third party tieback fields and the combined throughput for 2011 was in excess of 140,000 boe/d. The high FPSO throughput results in very low unit operating costs for the Boa field. Uptime for the FPSO and export systems is excellent and has remained above 90 percent.

The Boa field working interest will add 0.5 million barrels of 2P developed producing reserves to Bridge. Operating as a subsea tieback the field delivers low maintenance oil production with a very high operating margin. Bridge estimates that at an oil price of $100/bbl it will receive over $90/bbl after tax for each barrel produced from the Boa field in the period 2012 - 2014 as a result of the company's accumulated tax pool.

The Boa field has low exposure to decommissioning liabilities and is expected to produce until 2022.

The transaction

The agreement has an effective date of January 1, 2012 with a consideration of $18.1million. The estimated completion date is expected to be around September 2012. At completion the adjusted net consideration is expected to be around $17.1 million with a transfer of around 39,000 barrels of oil stock (value at $100/bbl circa $3.9 million). This stock can be sold immediately reducing the effective consideration to around $13.2 million.

The Transaction remains subject to the satisfaction of certain conditions including pre-emption rights, joint venture partner approvals and approval by respective government authorities.

"The acquisition represents consistent delivery in line with our previously communicated strategy to build a solid base of cash flow for re-investment. The Boa field is a source of reliable production with very high operating margins, supported by the accumulated tax shelter in the UK. The acquisition further diversifies the source of our income and contributes cash to support on Bridge's exploration and development program going forward," Bridge's CEO Tom Reynolds commented.


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