Chrysaor To Buy Spirit's Armada Stake
UK upstream independent Chrysaor said March 22 it has agreed with Spirit Energy to acquire its entire interests in the Armada, Maria and Seymour gas and condensate fields in the UK North Sea. Upon completion expected 2H2018, Chrysaor will own 100% of the Armada Area.
Spirit Energy, the joint upstream venture formed in 2017 of Centrica and Germany's Bayerngas Norge, will retain associated liability for decommissioning subject to a cap, said Chrysaor. Spirit Energy itself did not release a statement.
Chrysaor CEO Phil Kirk said: “This acquisition is part of Chrysaor’s strategy to prolong asset life, maximise recovery and deliver value from its UK North Sea portfolio. Chrysaor can now progress its plans to realise the full potential of the fields and will shortly commence well site surveys and secure long lead items and drilling equipment.” Last year, private equity backed Chrysaor acquired Armada and several other mostly gas assets, many of them ex-BG interests, from Shell for a price tag of up to $3.8bn.
Consultancy Wood Mackenzie's senior research analyst for North Sea upstream, Fiona Legate, said: "The fields produced 8,300 barrels of oil equivalent per day in 2017 and the previous partners had planned to cease production this year. However, Chrysaor is planning to implement a late-life investment project." She said this makes sense for Chrysaor as it has a declining asset base with production dropping below 100,000 boe/d by 2020: "This is a prime example of getting assets into the right hands via M&A which is positive for the UK continental shelf."
A Chrysaor spokesman declined to divulge the latest transaction price or the cap on decommissioning liability. However he told NGW there is no change to Chrysaor's ambition of becoming a pan-northwest European independent. Currently the firm has assets only offshore the UK. Seymour and Maria are satellite fields in Greater Armada, so this deal does not relate to the Wintershall-operated Maria oilfield offshore Norway that came onstream late 2017 where Spirit's 20% stake previously belonged to Bayerngas Norge.
Graphic and banner photo credit: Chrysaor