EnQuest has signed a sale and purchase agreement ('SPA') with Equinor to purchase a 40.81% equity interest in the Bressay oil field. Completion of the transaction is subject to the satisfaction of a number of conditions precedent. Under the terms of the SPA and subject to all partner approvals, EnQuest will also assume operatorship of the licences following the plugging and abandonment of the 3/28-1 well by Equinor. The initial consideration is £2.2 million payable as a carry against 50% of Equinor's net share of costs from the point EnQuest assumes operatorship. EnQuest will also make a contingent payment of $15 million following OGA approval of a Bressay field development plan. There are no gross assets or profit before tax associated with the assets.
- 40.81% equity and operatorship for an initial consideration of £2.2 million
- Payable as a carry against 50% of Equinor's net share of costs from completion
- A contingent payment of $15 million to Equinor on regulatory approval of a Bressay field development plan*
- Low-cost addition of up to 115 MMbbls (net) 2C resources, depending on development concept
- ~65% increase in EnQuest's 2C resources from 173 MMbbls to 288 MMbbls
- A number of development scenarios are under consideration, including a potential tie back to Kraken, reducing emissions, costs and extending its field life
- No material near-term capital commitments
- If developed via Kraken, Bressay produced gas may be used for fuel for the FPSO, reducing carbon emissions over the longer term
- Aligned with EnQuest's proven capabilities in heavy oil, drilling and low risk subsea tie backs
- Establishes a strategic partnership with Equinor, jointly leveraging UKCS development capabilities
- Appropriate extensions to licence expiry dates and commitments are condition precedents to completion
EnQuest Chief Executive, Amjad Bseisu, said:
'We are delighted we have agreed the acquisition of a material operating interest in the Bressay field and to partner with Equinor. With the addition of up to 115 MMbbls of net 2C resources, Bressay provides EnQuest an opportunity to demonstrate its proven capabilities in low-cost drilling, near-field and heavy oil development. The heavy oil skills and knowledge the Group has acquired from Kraken will help us unlock the potential of this large 1 billion bbl oil in place field. We would like to thank Equinor for their confidence in our capabilities and we look forward to a productive partnership with Equinor and Chrysaor.'
Bressay oil field
Bressay is a heavy oil field in the Northern North Sea located in 110 metres water depth and 12 kms Northeast of the EnQuest operated Kraken heavy oil field. Bressay is one of the largest undeveloped oil fields in the UKCS with an estimated stock-tank oil initially in place ('STOIIP') of 600 to 1,050 MMbbls. The field was discovered in 1976 and has been appraised through the drilling and testing of four further wells, with flow rates of up to 2,900 bopd achieved.
The Bressay field is located across four UK licence blocks: P234, P493, P920 and P977. Each of these licence blocks has the same equity partnership. Current partners in the Bressay field are Equinor (81.62%) and Chrysaor (18.38%).
*The contingent payment increases to $30 million in the event that EnQuest sole risks Equinor in the submission of the field development plan.
Click here for Equinor press release: Equinor transfers operatorship of Bressay project to EnQuest