Faroe increases stake in Blane and Enoch fields in North Sea (UK)
- Business & Finance
Faroe Petroleum is increasing stake in its UK North Sea assets Blane and Enoch, by acquiring Roc Oil GB Holdings (Roc GB) from Roc Oil Europe Limited (Roc).
The London Stock Exchange quoted oil and gas company will buy Roc GB from a subsidiary of Australia’s Roc Oil Company Limited, for a total consideration of $17 million.
Roc GB holds a 12.5006% interest in the Blane field, and a 12.00% interest in the Enoch field, both in the UK North Sea. After the acquisition, Faroe will hold total of a 30.5% non-operated interest in the Blane field (Pre-Acquisition interest 18.0041%) and a 13.86% non-operated interest in the Enoch field (Pre-Acquisition interest 1.86%).
Faroe says that the acquisition is expected to complete before the year-end and is subject to UK regulatory approval and a waiver of certain conditions by the Blane field joint venture partners.
According to Faroe, the acquisition consideration is made up of $17 million, plus up to a further $3 million payment deferred contingent upon certain Blane field performance targets being met in the second half of 2015. Faroe further said that the consideration is to be funded from cash and bank debt drawn against the company’s borrowing base facility.
Graham Stewart, Chief Executive of Faroe Petroleum, said: “We are very pleased to announce this acquisition, which increases our stake in the low cost, high quality and long field life Blane asset. Blane offers significant upside potential in the form of increasing reserves and production as well as in extending field life. The transaction is also very tax efficient for us, providing shelter for both past and future tax losses in the UK. We have at this stage chosen not to amend our production guidance for the year but will review this at the time of our Interim Results in September.”
“Meantime, drilling operations on the Boomerang and Portrush prospects continue as scheduled, and the company will announce these results when drilling operations are complete, expected in September 2015.”
Blane and Enoch fields
Blane was discovered in 1989, and is located on the Central Graben of the UK continental shelf, extending into the Norwegian sector. Production started in September 2007 from a Tertiary Palaeocene Forties sands reservoir with a structural closure. The oil is of high quality with 420 API. The field has been developed as a sub-sea tie-back to the BP-operated Ula platform located in the Norwegian continental shelf (34 kilometres to the north-east) and currently comprises two horizontal production wells with gas lift and one water injection well. Blane is a low operating cost producing field with upside potential in the existing reserves and the potential for further in-fill drilling. Talisman Energy Norge AS is the operator.
In 2014, gross production from Blane was 4,070 boepd and average operating costs were approximately $17.7/boe. Gross production from Blane in H1 2015 averaged at the lower rate of 2,892 boepd, caused largely by unplanned shut-downs, and the field has been producing at approximately 4,100 boepd since it came back on full production on August 22, 2015.
Furthermore, the Enoch field has been developed as a single well subsea tie-back to the Marathon-operated Brae field. The field was closed in due to a leak at the subsea well-head, which has since been repaired, and the field is currently planned to be brought back on production during H2 2015.
The Talisman North Sea Limited operates the Enoch field, which is currently suspended and is planned to be brought back on stream, pending resolution of certain technical and commercial matters, Faroe Petroleum said.
2P Reserves at the effective date of January 1, 2015 as estimated by the company, were 1.60 mmboe and 0.45 mmboe for the Blane Interest and the Enoch Interest respectively, which correspond to an acquisition cost between $8.3/boe and $9.8/boe.