Cairn sells half of its interest in Nova project

Cairn Energy has entered into a farm-out agreement for the sale of a 10% interest in the Wintershall Dea-operated Nova development offshore Norway.

With effect from January 1, 2019, ONE-Dyas Norge will acquire 10% in the project by paying $59.5 million plus customary working capital adjustments on completion, Cairn said in a statement on Tuesday.

Following this transaction, Cairn will retain a participating 10% interest in the Nova development and reduce its capital expenditure to the end of 2021 in the Nova area by approximately $110m.

Cairn said it will use the proceeds of the transaction to fund group exploration and development activities.

The Nova field development plan was submitted and approved in mid-2018 by the Norwegian Petroleum Directorate with first oil targeted in 2021.

The transaction remains subject to written consent by the Norwegian Ministry of Petroleum and Energy, partner and third-party approvals.

As a result of the transaction, subject to approvals, the partners in these licenses will be as follows: Licenses PL418/PL418B: Wintershall DEA (Operator) 45%, Spirit Energy 20%, Edison 15%, Cairn 10%, ONE-Dyas 10%; and, License PL378: Wintershall DEA (Operator) 76%, Cairn 12%, ONE-Dyas 12%.

The gross asset value of the interests being transferred was $62.5m, the net asset value was $28.5m.

The Nova field is located in the Norwegian North Sea, 120km northwest of Bergen. The expected recoverable reserves from the field are around 80 million barrels of oil equivalent (boe), of which the majority will be oil. The partnership is investing almost 1.1 billion euros in the development of the Nova field, which is expected to come on stream in 2021.

The Nova is being developed with two subsea templates tied back to the Neptune-operated Gjøa platform. Gjøa will receive the well stream, and provide water injection and gas lift to the Nova field. A new module will be lifted onto Gjøa in 2020.

In May this year, Wintershall Dea installed two subsea templates on the ocean floor in Norway, marking a major milestone for its operated Nova project.

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