Hartshead Closes Sale of 60 Percent Stake in UK Project

Hartshead Closes Sale of 60 Percent Stake in UK Project
The transfer serves to meet costs for the initial phase of development.
Image by PeopleImages via iStock

Hartshead Resources NL said Thursday it had completed the transfer of 60 percent interest in a project in the United Kingdom Southern Gas Basin for a gross of $132.23 million (about AUD 196.3 million) to help the Australian company meet costs for the initial phase of development.

The divestment for the License P2607 project to RockRose Energy, a UK North Sea hydrocarbon developer, now means Hartshead “has the equity funding required to meet the company’s share of non-debt project development costs for Phase 1”, chief executive Chris Lewis said in a press release.

“The completion of the Farm-out is a major milestone for Hartshead, as it materially de-risks the project and provides a clear pathway to the full financing and subsequent development”, the company said in the announcement. “The transaction implies a significant uplift in value for the project and secures over $536 million of gross project expenditure, which provides both technical and commercial validation of the Company’s gas development”.

The payment, $8.08 million (over AUD 12 million) of which has been fulfilled in cash, includes $48.4 million of UK government investment and capital allowance, Hartshead said.

The Perth city-headquartered company said it will make the final investment decision (FID) for phase one by the third quarter.

The initial phase seeks to redevelop the Anning and Sommerville fields with six production wells. Hartshead expects production in these wells to start 2025 with up to 140 million cubic feet of gas per day in gross volume.

“The company has recently advanced discussions with a number of groups on the debt financing of its remaining share of development costs and has strong confidence in successfully concluding these discussions”, it said. “At this stage the remaining development financing will likely comprise of a bond issue, pre-sale of Hartshead’s net gas sales, or a combination of both”.

Hartshead said May 2 announcing the conclusion of the geological survey for the two fields it had completed the issuance of $20-million shares to keep it “well-funded to progress key project works”.

The survey completion allows the company to progress with the required field development plan (FDP).

“The Hartshead team is advancing the project work streams with completion of FEED [front-end engineering and design] and FDP imminent and our FID planned for Q3 [third quarter] of this year”, Lewis said in Thursday’s announcement.

To contact the author, email jov.onsat@rigzone.com

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