Cairn, EnQuest Acquire First Oil's Kraken Stake
Cairn Energy plc and EnQuest plc have acquired First Oil Expro Ltd’s 15-percent interest in the Kraken development in the UK North Sea after the Aberdeen-based company entered administration.
Following the announcement that First Oil had put its stake in Kraken up for sale, Cairn Energy purchased an additional 4.5 percent interest in the project through its wholly owned subsidiary Nautical Petroleum Limited. The acquisition brings Cairn’s total working interest in the development to 29.5 percent. EnQuest, the operator of Kraken, will increase its interest in the project to 70.5 percent after buying a further 10.5 percent interest in the development from First Oil.
There is a nominal cash consideration payable in respect of the transaction, however Cairn will waive its right to reclaim approximately $3 million of cash calls paid on behalf of First Oil in January and February 2016. EnQuest has also waived its right to reclaim approximately $7 million of cash calls paid on behalf of First Oil during the same period. Cairn and EnQuest will acquire the reserves and resources associated with the additional interests.
In December last year, EnQuest revealed that the Kraken project was on schedule to produce first oil during the first half of 2017 and stated that capital spending costs had been reduced by more than 10 percent to $2.86 billion.
Separately, accountants KPMG announced that after being appointed administrator of First Oil Expro Limited, a subsidiary of First Oil, on Friday it has executed a sale agreement with Zennor Petroleum Limited for the sale of First Oil Expro's interests in a number of assets, including two subsidiary companies: First Oil & Gas Limited and Antrim Resources NI Limited.
Commenting on the transactions, Jim Tucker, restructuring partner at KPMG, said in a company statement:
"We are delighted to announce these two company sales today, which are an excellent outcome for stakeholders. The fact that their owner, First Oil Expro Limited, sold them via an administration process is a reflection of the significant challenges facing UK North Sea oil and gas companies in the current oil price environment. These sales will ensure that the group's four largest field interests are smoothly transferred to new ownership, and provide time to resolve the position concerning the smaller assets in the group's portfolio.
"We would like to express our gratitude to management, employees, joint operating partners, regulators and other key stakeholders for their support during this challenging period for the group. These sales are the culmination of many months' work across that group maximising value for the company’s stakeholders."
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