Hartshead works on putting funding in place for UK North Sea gas project

ASX-listed Hartshead Resources NL, which is exploring parallel investment opportunities through project finance or further equity divestment, has appointed specialist corporate finance energy advisors to support its efforts to secure financing for Phase I of a gas project in the UK North Sea.

Hartshead Resources

Hartshead Resources has appointed Carlingford-GFI (Carlingford) to assist in finalising third-party financing for Phase I of the Anning and Somerville gas field development. This follows the recent submission of a field development plan for the project, which was handed to the North Sea Transition Authority by Hartshead and RockRose Energy.

In addition, the ASX-listed player retained LAB Energy Advisors Limited (LAB Energy) to support the company with project finance or further equity divestment. The extension of the LAB Energy Advisors mandate follows a farm out of 60 per cent interest in the P2607 license to RockRose Energy.

Hartshead highlights that both companies will now work to support it in securing third-party finance for the development of the previously producing gas fields in the UK Southern Gas Basin. This field development consists of an unmanned dual platform development with gas transportation via a subsea tie-in to the offtake route.

Chris Lewis, CEO of Hartshead, commented: “Carlingford are a sector-leading corporate finance boutique with a strong track record of delivering structured project finance solutions for development projects on par with our Phase 1 gas development. LAB Energy successfully supported Hartshead in securing an excellent farm-out with RockRose earlier this year.

“I am confident that the appointment of both Carlingford and LAB Energy will ensure the company achieves the best outcome for shareholders as we move toward putting all of our required development funding in place, prior to taking FID later this year.”

Furthermore, Hartshead is exploring multiple parallel options to secure project finance, including a conventional debt facility, pre-payment on future production streams, publicly listed and private bonds and possible additional divestment of equity in the Phase 1 development project.

Additional equity divestment will also be considered alongside various debt options with a view to maximising long-term value to shareholders. The company underlines that discussions are already advanced on all of these fronts, and the advisory team is now in place to deliver the optimum funding solution.

Seaward License P2607 holds multiple gas fields and prospects; Source: Hartshead
Seaward License P2607 holds multiple gas fields and prospects; Source: Hartshead

Discovered in 1969, Anning and Somerville came online in 2008 and 1999, respectively. The fields ceased production in 2015, at which point Somerville had produced 48 bcf of gas, and Anning had produced 16 bcf of gas. The company expects to conclude discussions with parties for the debt funding of its remaining expenditure alongside the FID in 2H 2023. The planned six production wells are forecast to come on stream in early 2025 at gross peak production rates of 140 mmcfd.

“We are rapidly progressing our Phase I development alongside our JV partner RockRose, with work across platforms, pipelines, wells, and offtake advancing well. With the recent submission of the field development plan, we will now move to progress our environmental statement later this year. The company and Joint Venture are very focused on delivering the key milestone of taking FID on Phase 1, later this year,” added Lewis.

According to the firm, recent activities revolve around the start of the seabed geotechnical survey. The main objectives of this survey are to provide a confirmation of the seabed and sub-seabed soil conditions to finalise the design and the efficient installation of the offshore facilities and to ensure the safe location of the jack-up drilling rig at the Anning and Somerville locations.

After completing Phase 1, the project’s Phase 2 will focus on the Hodgkin and Lovelace fields while Phase 3 may also be in the pipeline, as Hartshead’s exploration portfolio underwent a study by Xodus Group, generating a new prospect inventory totalling 14 prospects and leads with unrisked 2U Prospective Resources of 344 Bcf.