Petrofac has announced plans for the widely expected demerger of its North Sea oil and gas assets to a new company which could be valued at about £1billion.
EnQuest will take control of Petrofac’s operated West Don and Don Southwest fields north-east of Shetland and the UK oil and gas assets of Sweden’s Lundin Petroleum.
EnQuest’s new chief executive, Amjad Bseisu, said the new company, expected to join the FTSE 250 index, would have 90%-plus of its 220 staff and contractors working in or out of Aberdeen, and they will remain at Petrofac’s Consort House in the city’s harbour area.
Mr Bseisu, formerly chief executive of Petrofac Energy Developments (PED), said he would be spending a lot of time in the Granite City but declined to name Aberdeen as the headquarters of EnQuest, which will also have a small office in London.
PED is the Petrofac business which owns the company’s UKCS assets, made up of 27.7% in West Don and 60% in Don Southwest, plus 100% equity in a UK discovery called Elke.
Lundin assets in the new business will be the Heather, Broom, Thistle and Deveron fields and Peik, South West Heather and Scolty finds.
EnQuest will have independently assessed proven and probable reserves of more than 80million barrels of oil equivalent, plus contingent resources of 67.5million barrels of oil and 30.6billion cubic feet of gas.
Petrofac, the FTSE 100 energy engineering and production service group, will own 45% of EnQuest and Lundin will own 55%.
Mr Bseisu said EnQuest, which will be listed in London and Stockholm, would continue to seek opportunities in the UK North Sea.
He said: “EnQuest will be debt free and will have a credit facility for organic growth and acquisitions.
“This is a good time for consolidation as small players are not well placed for capital and the majors are looking to rationalise. As a focused independent company, we will be positioned to grow EnQuest in and around our core areas and through selective acquisitions.”
Petrofac chief executive Ayman Asfari will oversee the group’s continuing energy developments and production service operations in Indonesia and Malaysia on an interim basis, supported by Robert Jewkes, managing director of energy developments, and Gordon East, managing director of production services.
Analysts at Evolution Securities said the anticipated decision of Petrofac to demerge its energy development business had a compelling motive behind it. They said: “The combination with Lundin assets gives the business a scale and size which should allow EnQuest to become a rounded North Sea player with proven and probable reserves of 80million barrels.”
Non-executive chairman of EnQuest will be Jim Buckee, former president and chief executive of Canadian group Talisman Energy and currently a non-executive director of Scottish company Cairn Energy.
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