ConocoPhillips has agreed to offload its UK oil and gas exploration and production business, made up of two subsidiaries (jointly called ConocoPhillips UK), to Chrysaor for $2.675bn.
Image: Chrysao to acquire the UK oil and gas business of ConocoPhillips. Photo: courtesy of ConocoPhillips Company.
The two ConocoPhillips subsidiaries indirectly own the company’s exploration and production assets across the UK, along with associated decommissioning liabilities.
The assets to be divested under the deal produced nearly 72,000 barrels of oil equivalent per day (boepd) in 2018. The year-end 2018 proved reserves from the assets were about 99 million barrels of oil equivalent (BOE).
The deal will not include ConocoPhillips’ London-based commercial trading business and the company’s 40.25% stake in and operatorship of the Teesside oil terminal located on the UK east coast.
The US oil and gas company expects to use the proceeds from the sale for general corporate purposes.
ConocoPhillips chairman and CEO Ryan Lance said: “We are extremely proud of the legacy we’ve built in the U.K. over the last 50 years and are pleased that Chrysaor recognizes the value of this business.
“This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost of supply opportunities.”
Through the acquisition, Chrysaor increases its 2018 production to 177,000 boepd, making it a major oil and gas producer in the UK North Sea.
Furthermore, the acquisition is said to speed up the execution of Chrysaor’s strategy to become a leading independent, full cycle exploration and production company in Europe.
Through the transaction, Chrysaor will add three material assets to its portfolio in the form of Britannia and J‐Block – two new operated hubs in the UK Central North Sea – and a stake in the Clair Field area located in the West of Shetlands region.
Chrysaor said that the stake in the Clair Field area and the prospects for future additional development at the field complement the company’s existing West of Shetlands position in the Schiehallion Field.
Chrysaor chief executive Phil Kirk said: “In the Central North Sea, we will own a range of operated hub infrastructure providing access points in an area with the largest undeveloped contingent and prospective oil and gas resource base in the UK. In the West of Shetlands region, we have secured long life cashflows from two world‐class fields operated by BP.
“Chrysaor’s West of Shetlands position also provides exposure to a developing region with significant interest and momentum from major oil companies. We will seek to build on that through the acquisition of additional interests and acreage.”
The transaction is likely to be closed in the second half of 2019 after receiving regulatory approval and satisfying other conditions precedent.