British oilfield services provider Petrofac has signed an agreement to sell Petrofac GSA Holdings, representing 20% interest in the Greater Stella Area (GSA) development, and 24.8% stake in the FPF1 floating production facility to Ithaca Energy (UK) for a total consideration of $292m.

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Image; Petrofac will use the proceeds from the sale to reduce gross debt. Photo courtesy of Petrofac Limited.

The Greater Stella Area is located in the Central Graben area of the Central North Sea, on the UK Continental Shelf.

The gross assets to be sold were valued at $341m at December 31, 2017, and net assets at $249m.

Petrofac GSA also owns Petrofac’s long-term receivable, amounting to $124m at December 31, 2017, from the GSA joint operation partners.

The joint venture partners in the GSA are Dutch company Dyas and Petrofac.

Under the agreement, Ithaca will pay $145m by or on completion, and $120m of non-contingent deferred consideration during 2020-2023. An additional $28m of contingent consideration will be payable depending on the performance of the field.

The transaction, expected to be completed in the first quarter of 2019, will be subject to various conditions such as completion of Ithaca’s acquisition of Dyas UK’s 25% stake in the Greater Stella Area development and its shares in the FPF1 Company under an agreement between Ithaca and Dyas.

According to Petrofac, the transaction is expected to result in a post-tax impairment charge of approximately $55m.

Petrofac will use the proceeds from the sale to reduce gross debt. The company will continue to provide Duty Holder services to the FPF1 floating production facility on a ‘life of field’ contract.

Petrofac Group CEO Ayman Asfari said: “This disposal marks a further milestone in our journey back to a capital-light business and, along with recently-agreed transactions in Mexico and Tunisia, marks the significant progress we are making on our stated strategy.”

Petrofac GSA group recorded a net profit of $15m for the year ended December 31, 2017, and approximately $18m in the six-month period ended June 30, 2018.

The FPF1 floating production facility company has an option under which Petrofac will be required to acquire the FPF1 facility once the development stops production.

The price for this acquisition will be $127m for the first five years and decline thereafter. The option will not be effective after completion of the transaction.