Petrogas NEO UK, a jointly owned company of Petrogas and HitecVision, will acquire stakes across 10 fields, with an average 2019 production of 25,000 barrels of oil equivalent per day

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Image: Map showing the assets involved in the deal between Total and Petrogas NEO UK. Photo: courtesy of Total.

Total has agreed to offload certain non-core operated and non-operated assets in four producing areas in the UK North Sea to Oman-based Petrogas and Norwegian private equity investor HitecVision, for $635m (£506.6m).

The acquisition is being executed by Petrogas NEO UK, a jointly owned company created by Petrogas’ subsidiary Petrogas E&P UK and HitecVision’s investment platform NEO E&P.

Assets involved in the deal between Total and Petrogas NEO UK

A total of 10 fields are involved in the transaction, which are all located in the Eastern North Sea, that were previously owned by Maersk Oil, which was subsequently acquired by Total for $7.45bn (£5.94bn) in March 2018.

The assets to be divested are expected to have an average production of 25,000 barrels of oil equivalent per day in 2019.

Total exploration and production president Arnaud Breuillac said: “This transaction is consistent with our portfolio management strategy, aiming at lowering our break-even point by optimizing capital allocation and divesting high technical costs assets. Our primary objective is to maintain the organic break-even before dividend below $30 per barrel and high-grading our portfolio will help us achieve this.”

Through the acquisition, Petrogas NEO UK gains operatorship of the Quad 15 and Flyndre areas, 100% ownership of a floating production storage and offloading (FPSO), and an operator organisation with more than 110 employees and contractors.

In the Dumbarton, Balloch, Lochranza, Drumtochty fields, Petrogas NEO UK will acquire 100% stakes from Total. The company will acquire a 65.94% stake in Flyndre, a 66.67% stake in Affleck, and a 60.6% stake in Cawdor, which are all operated by Total.

Petrogas NEO UK will also be acquiring stakes from the French oil and gas giant in GoldenEagle (31.56%), Scott (5.16%) and Telford (2.36%), which are operated by CNOOC.

Petrogas CEO Usama Barwani said: “Five years back, Petrogas stepped into Europe by acquiring Chevron’s assets in the Netherlands, opening a new international heartland with vision of consolidation and growth in the North Sea.

“This acquisition in the UK is a significant step in line with a wider vision, adding material asset base, a diverse portfolio and valuable talent pool.”

The transaction, which is subject to receipt of approval from the relevant authorities, is expected to be completed in December 2019.