Page 11 - Euroil Week 41 2019

EurOil INVESTMENT EurOil
Energean disposes of North Sea assets
EUROPE
Energean considered the North Sea assets non-core.
EAST Mediterranean-focused Energean Oil & Gas has sold off its North Sea business as it looks to concentrate on its core activities.
The company agreed in July to acquire the upstream division of Italian group Edison for $750mn – a move aimed at building up its base in the East Mediterranean, where it is develop- ing several large gas fields off Israel. That deal is not yet concluded, although Energean has now struck an agreement to sell Edison E&P’s stakes in North Sea fields to UK-based Neptune Energy for $250mn.
Under the transaction announced on Octo- ber 14, Neptune will assume Edison E&P’s 25% interest in the Glengorm gas condensate dis- covery in the UK central North Sea, as well as the smaller Scot (10.5%), Telford (15.7%), Tors (68%), Wenlock (80%) and Markham (3.1%) fields, also in UK waters. It will also buy shares in the Nova (15%) and Dvalin (10%) fields off the coast of Norway.
The deal is subject to standard approvals, and is also conditional on Energean completing its takeover of Edison E&P. It should close in early 2020, according to Neptune.
The core aim of Energean’s acquisition of
Edison E&P was the company’s producing assets in Egypt. Besides in Norway and the UK, the company also controls assets in Algeria, Croatia and Italy. Energean said several months ago it considered Edison E&P’s North Sea operations non-core, revealing plans to dispose of them.
These assets are worth much more to Nep- tune, which is looking to consolidate its posi- tion in the North Sea. Through the deal, it will increase its proven and probable reserves by 30mn barrels of oil equivalent (boe).
The CNOOC International-operated Glen- gorm discovery could be tied back to Neptune’s Seagull project. Nova, due on stream in 2021, is similarly expected to use infrastructure at Nep- tune’s Gjoa field. Dvalin, another key project, is set to be tied back to Equinor’s Heidrun field. Four gas wells will be drilled there starting at the end of this year, with first production anticipated in late 2020.
“The assets are an excellent fit with our North Sea portfolio,” Neptune CEO Jim House said in a statement. “Nova and Dvalin are expected to add 12,000 boepd to our production base over the next two years and Glengorm adds signifi- cant potential for the longer term.™
PERFORMANCE
BP to suffer $2-3bn in charges, output disruptions in Q3
UK
The British major is fast-tracking its divestment plans.
BP has warned that its third-quarter results will include $2-3bn in charges relating to US divest- ments, while it will also suffer from lower output and higher taxation.
The British major reported on October 11 it aimed to shed $10bn in assets by the end this year, after earlier planning to sell this much in total in 2019 and 2020. The divestments follow its $10.25bn takeover of US onshore assets from BHP last year.
In its statement, BP said the $10bn of sales this year would amount to “the majority” of its two-year divestment plan, as this has not only been accelerated but also expanded.
The $10bn sum includes the $5.6bn sale of BP’s Alaskan upstream and midstream assets to Hilcorp – a deal agreed in August but still await- ing closure.
“BP has also agreed the sale of four packages of legacy gas assets from its US Lower 48 busi- ness,” it said. “BP will also continue to review asset valuations as divestments in the US Lower 48 progress over the fourth quarter of 2019.”
The divestments agreed so far will result in BP taking on a non-cash after-tax charge of $2-3bn in the third quarter, it said.
Impairments will keep BP’s gearing – the ratio of debt to value of ordinary shares – at the top end of the 20-30% target it has set through- out the rest of the year. But net debt should fall, the company said, causing gearing to return to the middle of the range during 2020.
BP also warned of a third-quarter cut in production of 100,000 barrels of oil equivalent per day (boepd), linked to a 14-day closure of its facilities in the Gulf of Mexico as a result of Hurricane Barry, as well as turnarounds elsewhere.
The company will also endure an underlying effective tax rate of 50% during the three-month period, which is “significantly higher than in the second quarter.” This is because a higher share of its output in the quarter will come from higher tax regions.
Nevertheless, its full-year tax guidance remains unchanged at around 40%, it said.™
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