Serica Energy to buy 18% stake in Erskine field from BP
LONDON, United Kingdom -- Serica Energy reported that it has agreed to acquire an 18% interest in United Kingdom blocks 23/26a (Area B) and 23/26b (Area B) containing the Erskine field, located in the North Sea, from BP for $11.1 million in cash plus 27 million new Ordinary Shares in the company subject to certain working capital adjustments on completion. The transaction is inter alia conditional on consent of the other participants in the Erskine Field and related agreements and on approval by the Department of Energy and climate change.
The transaction provides Serica with an immediate and long term cash flow stream. Net production for the year 2014 accruing to the interest acquired is estimated to be 1,234 boepd after providingfor periods of shutdown to meet planned maintenance programmes. Provision for decommissioning at the end of field life has been provided for on the basis that Serica’s estimate of decommissioning costs relating to the asset acquired will be met by BP, on an inflation adjusted basis, with Serica being responsible for any costs above this level.
The transaction increases Serica' s proven and probable reserves from an estimated 5.2 mmboe to an estimated 8.8mmboe (Company estimates) and increases proven and probable reserves pershare by 53% (after adjusting for the maximum number of new Ordinary shares to be issued as part of the consideration).
The transaction has strong synergies with Columbus, being a gas and gas condensate stream which uses the Lomond platform as export facility, one of the planned alternative export routes for Columbus production, and complements Serica’s efforts to bring the Columbus field into production.
The transaction is tax efficient for Serica, accelerating recovery of both past and future tax losses in the United Kingdom, and is in line with Serica' s strategy to unlock the value of its existing assets and build a platform from which it can generate future growth.
The transaction is both asset and income accretive to Serica on a per share basis and is accretiveon a reserves per share basis.