Photo: Maersk Inspirer rig; Source: Repsol Norge

Norwegian player buying stake in Repsol’s North Sea field

Lime Petroleum, a Norwegian subsidiary of Singapore’s Rex International, has inked a deal to acquire an interest in a Repsol-operated field located in the North Sea offshore Norway.

Rex revealed on Wednesday that Lime Petroleum has entered into a sale and purchase agreement with KUFPEC Norway to acquire the latter’s 10 per cent interest in the Repsol-operated Yme field, which is located in the Norwegian North Sea, for a post-tax consideration of $68 million (about NOK 633 million).

Dan Broström, Executive Chairman of Rex International Holding, remarked: “This acquisition of more producing assets by Lime Petroleum is part of the Rex Group’s capital management and investment strategy to seize opportunities with an aim to build and unlock value for our stakeholders. As part of the acquisition, Lime Petroleum will assume tax balances (as at 1 January 2022) of NOK 309 million ($33 million).

“Including the existing tax balance of Lime Petroleum, the total tax balance will be NOK 587 million ($63 million). These deferred tax assets are recoverable for Lime Petroleum. This is especially important as the Norwegian tax system has been restructured to a cash-flow tax, among which is the removal of the specific tax incentive for exploration activities from 2022.”

This deal is expected to further strengthen Lime’s position as a “full-fledged exploration and production player” on the Norwegian Continental Shelf (NCS), following the firm’s acquisition of an interest in the producing Brage field, which was completed at the end of 2021.

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Rex explained that the production from the Yme field will contribute to its target of reaching a production of 20,000 bpd across various geographies. According to the firm, the transaction will be financed through a combination of cash at hand and funds from the NOK 950 million bond that was raised in June 2022 with assistance from Nordic independent investment bank ABG Sundal Collier.

“Rex considers the acquisition to be highly accretive and it will have a positive impact on revenue, EBITDA, profit and production in the long term. Completion of the acquisition is expected in the fourth quarter of 2022. Similar to the Brage acquisition, the effective date of the acquisition, upon completion, will be deemed to have taken place on 1 January 2022, as is the norm for transactions in the Norwegian Continental Shelf,” added Broström.

Located in PL 316 and PL 316B on the NCS, the Yme field is situated in the south-eastern part of the Norwegian sector of the North Sea, in the Egersund Basin, 130 kilometres northeast of the Ula field. The water depth at the site is 100 metres and the field includes two separate main structures – Gamma and Beta – which are 12 kilometres apart, while the reservoirs are in sandstone of Middle Jurassic age in the Sandnes Formation, at a depth of 3,150 metres, elaborated Rex.

While the Yme field was discovered in 1987, it did not start production until 1996. Back in 2001, production ceased because the operation of the field was no longer regarded as profitable. Repsol took over the project in 2015 and submitted a revised PDO for the field in December 2017, which was approved in March 2018.

Furthermore, the new development project for the field entailed the engineering, procurement and installation of a new wellhead module on top of the existing facilities, the modifications and upgrading of the Maersk Inspirer mobile offshore drilling and production unit prior to installation in the field and subsequent hook-up to existing wells in and installations on the seabed offshore.

After years of delays, the Yme field started producing again in late October 2021, making it one of the first oil fields on the Norwegian shelf to be redeveloped after being shut down. The remaining reserves in the Yme field stand at 9.70 million Sm3 of oil equivalent, according to the Norwegian Petroleum Directorate. The field has undergone a commissioning period and is currently ramping up towards a plateau of about 5,000 bopd net to Lime Petroleum in late Q4 2022, outlined Rex.

The Yme field has been shut down twice since it came back online. The first shutdown occurred in November 2021, less than a month after the first oil, to “assess the high oil in water readings,” while the second one took place a few months ago.

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Current partners in the field include Repsol Norge (operator, 55 per cent interest), Lotos Exploration and Production Norge (20 per cent), OKEA (15 per cent), and KUFPEC Norway (10 per cent).