Serica Will Buy Total UK Stakes, If BP Deal Clears
UK independent Serica Energy said August 3 it is to buy Total’s stakes in the Bruce and Keith North Sea gas fields and associated infrastructure, but only if a parallel deal to buy BP stakes in these and the Rhum gas field (collectively BKR) completes. The price for the Total deal would be $20mn, plus future profit sharing. Both deals are contingent on getting an exemption from US sanctions against Iran.
Serica said the deal “will be subject to completion of the previously announced acquisition of interests in the [BKR] fields from BP” and expects both deals to complete in September 2018. If secured, Total will sell a 42.25% stake in Bruce and 25% stake in Keith to Serica, net 1H2018 production from which was 4,700 barrels of oil equivalent/day of which 83% gas. Total will retain a 1% interest in Bruce. Serica's stakes in Bruce and Keith would reach 78.25% and 59.83% respectively, in addition to the 50% stake in Rhum to be acquired from BP.
“Completion of the transaction with Total E&P is anticipated to take place immediately after completion of the BKR transaction with BP which requires certain regulatory consents, including a licence from the US Office of Foreign Assets Control relating to ongoing operations on the Rhum field,” cautioned Serica CEO Mitch Flegg. When the £300mn (then $397mn) deal with BP was announced last November, the deal had been scheduled to close by mid-2018. Since then Serica noted May 9 the risk that Rhum might not be allowed to produce under planned US sanctions against Iran, which owns the other 50% of Rhum.
BP this year deferred work on the Rhum field because of the sanctions risk.
Serica said its payment to Total for the Bruce and Keith deal will be an initial $5mn cash, followed by further cash of $15mn in three equal portions eight, 16 and 24 months after completion, and that future payments would be linked to the assets’ performance “allowing both parties to share benefits.” Serica added that if Rhum production were interrupted by US sanctions, "the relevant instalments will be deferred, providing Serica with protection in the event that US sanctions are imposed more widely than currently anticipated.”
Total E&P is retaining liability for the costs of decommissioning facilities and wells already in place. Serica will pay further deferred consideration to Total E&P in respect of 30% of Total share, net of any tax relief attributable to Total.
Wet gas from the Bruce and Keith fields is processed at the Bruce complex and then transported by a 6-km spur line through the Frigg pipeline to St Fergus for natural gas liquids extraction, noted Serica.