Verus Petroleum buying Cieco for $400M

Verus Petroleum is set to buy Cieco Exploration & Production (UK) Limited, a subsidiary of ITOCHU Corporation for $400 million, adding to a recent spike in the North Sea M&A activity backed by private equity.

The acquisition includes a 23.1% interest in the Western Isles Development Project, a 25.8% interest in the Hudson field, a 2.0% interest in the Brent Pipeline System, and a 1.2% interest in the Sullom Voe oil terminal.

Verus said on Thursday the acquisition would add approximately 11,000 barrels of oil equivalent per day (boepd) to Verus’s daily production. The acquired entity is an asset holding company and the transaction does not involve the transfer of any personnel.

The transaction will be funded by a combination of equity, existing cash reserves and debt. Equity will be provided by HitecVision, the majority owner of Verus.

Alan Curran, Chief Executive of Verus Petroleum commented: “Verus is pleased to have signed this SPA with ITOCHU, which is aligned with our strategy to expand our production base and cash flow through the acquisition of high quality production assets. We are delighted to acquire high-value barrels with the Western Isles production in particular having very low lifting costs and being a long-life asset with strong cash generation.

Verus has recently been highlighted as part of new wave of privately backed oil firms has taken over the North Sea basin by storm spurring record M&A activity over the past few years.

Wood Mackenzie last month said that equity commitments of $10 billion have helped fuel $12 billion in M&A in the North Sea since 2014. Another $13 billion could be invested in the North Sea, based on disclosed funding.

As previously reported, Verus on April 30, 2018, announced multiple acquisitions -a 17 percent stake in the Alba field, a 47 percent interest in the Babbage gas field, and a 50 percent interest in the Cobra discovery.

Production boost to 18Kbpd


Commenting further on the Cieco deal on Thursday, Verus CEO Curran said: “This transaction builds on our Boa oil field acquisition in 2017, and our acquisition of interests in the Alba oil field and the Babbage gas field earlier this year. The combined Alba, Babbage and Cieco acquisitions increase our net production to around 18,000 boepd.

“The Western Isles development includes the Harris and Barra oil fields. Production has exceeded expectations since it started in November 2017 and is currently on plateau at in excess of 40,000 boepd, with an estimated field life of 15 years.

The transaction is subject to customary regulatory approvals and is expected to complete in the fourth quarter of 2018.

Offshore Energy Today Staff



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