Golden Eagle installation

EnQuest to buy Golden Eagle from Suncor

UK oil and gas company EnQuest has signed an agreement with Suncor Energy to buy Suncor’s entire 26.69 per cent non-operated equity interest in the Golden Eagle area for an initial consideration of $325 million.

Golden Eagle installation; Source: CNOOC

The Golden Eagle area comprises the producing Golden Eagle, Peregrine, and Solitaire fields located in the UK North Sea.

EnQuest said on Thursday it has agreed to acquire 100 per cent of the shares in North Sea (Golden Eagle) Resources Ltd, a new company which will, at completion of the transaction, hold Suncor’s non-operated equity interest in the Golden Eagle area.

The initial consideration is $325 million (which is subject to working capital and other adjustments), with additional contingent consideration of up to $50 million.

The contingent consideration is payable in the second half of 2023, if between July 2021 and June 2023 the Dated Brent average crude price equals or exceeds $55/bbl, upon which $25 million is payable, or if the Dated Brent average crude price equals or exceeds $65/bbl, upon which $50 million is payable.

A deposit of c.$3 million (being part of the initial consideration) is being provided by EnQuest which will be forfeited in most circumstances if the transaction does not complete.

EnQuest said it plans to finance the transaction through a combination of a new secured debt facility, interim period post-tax cash flows between the economic effective date of 1 January 2021 and completion, and an equity raise.

The completion of the transaction is subject to the satisfaction or waiver of various conditions precedent, including putting in place the funding arrangements, approval from EnQuest’s shareholders by ordinary resolutions, the approvals of joint venture partners in the Golden Eagle area and receipt of other customary regulatory and third-party consents.

The deal is expected to close no later than the third quarter of 2021.

EnQuest Chief Executive, Amjad Bseisu, said: “Upon completion, this acquisition will add immediate material production and cash flow to EnQuest and will allow us to accelerate use of our substantial tax losses. It also demonstrates our continued commitment to the UK North Sea and diversifies our existing production base.

“The assets have a strong safety record and a lower than average CO2e emissions intensity ratio.

“We look forward to a productive partnership with the operator, CNOOC and our future joint venture partners, NEO Energy and ONE DYAS”.

Golden Eagle area

The CNOOC International-operated Golden Eagle platform, located about 111 kilometres northeast of Aberdeen, produced first oil in October 2014.

According to EnQuest, the Golden Eagle area has significant remaining development potential, with anticipated field life extending into the early 2030s.

A four-well infill drilling programme is ongoing, with two of the four wells onstream. The programme is scheduled to conclude prior to completion of the transaction.

In addition, a number of unsanctioned activities associated with further subsea and platform infill drilling, topsides water debottlenecking and an active well intervention programme are being assessed.

Also, various third-party near-field tie-back opportunities being considered to utilise the available capacity of the facilities.