Tullow acquires Spring Energy Norway, plans disposal of UK and Dutch gas assets
LONDON -- Tullow Oil announces today that it has entered into an agreement to acquire Spring Energy Norway AS, a Norwegian exploration company, for a purchase price of $372.3 million which will be adjusted for working capital. The purchase has an effective date of 1 September 2012. Tullow also announced that it intends to begin a process to dispose of its exploration, development and production assets in the UK and Dutch Southern North Sea gas basin. These two transactions follow Tullow's strategy of active portfolio management and monetization of non-core assets and will enhance the Group’s considerable oil exploration portfolio.
Acquisition of Spring Energy
Spring is a Norwegian oil exploration company which holds 28 offshore licences across Norway’s continental shelf in North, Norwegian and Barents Seas covering just over 18,000 sq km. Spring is a very successful oil explorer having made six commercial discoveries out of 12 wells drilled since 2008. In 2013-14, Spring currently has plans to drill up to 16 exploration wells of which three are operated. Tullow’s assessment of Spring’s exploration portfolio is that it contains in excess of 230 MMboe of risked prospective resources and has existing reserves and resources of 24 MMboe. The vendors of Spring are HitecVision, a private equity company (87.6%) and other shareholders (12.4%) including some current Spring staff.
Spring has an experienced team of 37 people based in Oslo who have a successful track record of finding and monetizing Norwegian oil discoveries. The Spring team will form the basis of Tullow Norge AS. Spring’s Chief Executive, Roar Tessem, becomes Managing Director of Tullow Norge and will be responsible for managing Tullow’s assets offshore Norway and Greenland.
Following Tullow’s pre-qualification as an Operator on the Norwegian Continental Shelf earlier this year, the acquisition of Spring enables us to rapidly build a strong platform for future growth in Norway. In common with Tullow, Spring recently applied for licenses in Norway’s 22nd license round.
In addition to the purchase price, a bonus payment has also been agreed with the vendors in the event of commercial exploration success. This payment is limited to four specific prospects and will be paid on a sliding scale up to a maximum of $150 million per prospect and $300 million in aggregate. This acquisition remains subject to approval from the Norwegian Ministries of Energy and Finance.
Disposal of UK and Dutch SNS gas assets
Tullow is also announcing today that it intends to begin a process to divest its exploration, development and production assets in the UK and Dutch Southern North Sea. These gas assets currently produce approximately 18,000 boepd. It is hoped that this process will be completed by the end of 2013.
The Southern North Sea business has been highly successful for Tullow and a key contributor to the Group’s growth over the past decade. However, following exploration and development success in Ghana, Kenya and Uganda, these assets are now non-core to the Group and no longer fit within Tullow’s light oil focused portfolio.
Jeffries International Ltd have been appointed to manage the sale of these assets.
Aidan Heavey, Chief Executive of Tullow Oil, commented, “Active portfolio management is a key part of Tullow’s exploration-led strategy. These transactions are part of an ongoing process of carefully refocusing our business and ensuring efficient allocation of capital by monetising non-core assets and re-investing the proceeds in high potential oil exploration. Our Southern North Sea gas assets are therefore no longer core to Tullow’s business which has a clear focus on light oil in Africa and the Atlantic Margins. The acquisition of Spring adds a material portfolio of oil exploration assets and high quality people that will provide a superb foundation for building our portfolio and expertise in the highly prospective North Atlantic.”