Norway nods to Tellus for Gina Krog buy

An acquisition of a 15% interest in Gina Krog field, in the North Sea offshore Norway, by Sequa Petroleum’s 100% subsidiary, Tellus Petroleum, has received the Norwegian government approvals. 

Sequa Petroleum is an oil and gas company registered in the Netherlands, and Tellus Petroleum was established in 2012 with the aim to acquire a portfolio of interests in producing fields and discoveries on the Norwegian Continental Shelf.

This acquisition of Gina Krog stake from the French oil company Total was announced on October 29, 2015. Since then, the Gina Krog acquisition has received government approvals, and Tellus Petroleum has been approved as a new Norwegian Continental Shelf’s (NCS) licence holder.

Gina Krog is one of the NCS largest current developments. The development, operated by Statoil, is currently within budget and on schedule for first production in 2Q 2017. In light of the current industry environment, cost reductions and schedule improvements of the Gina Krog project are currently being pursued, Tellus’ parent company said on Monday.

According to the company, the 2P reserves are estimated at approximately 260 million barrels of oil equivalent (boe), of which 39 million boe are net to the company. Opex and Capex costs are both estimated at approximately $15 per boe. These estimates are calculated over the field life, from the effective date of January 1, 2015 (being the effective date of the company’s acquisition), representing a low marginal cost, said the company.

The transaction terms for the acquisition of Gina Krog, announced in October 2015, are at an attractive discount to comparable transactions in Norway, the company added. These terms result in all-in costs until first production of approximately $9 per boe of 2P reserves. The seller will retain the tax balances related to the Gina Krog investments prior to the effective date.

The company is planning to finance the Gina Krog transaction with a combination of equity raised by the company and of debt raised by both the company and Tellus.

The company expects to complete the Gina Krog transaction in April 2016.