Troubled North Sea oil firm Antrim Energy is to sell off its UK assets in a £32million deal after admitting the costs of developing the Causeway field had proved too much.
Aberdeen-based First Oil will pay $53million (£32.2million) in cash, plus take on financial liabilities for Antrim’s UK subsidiary.
Antrim had stakes in the Causeway Area project and the Cormorant East field, along with exploration licences in the Kerloch and Typhoon prospects.
The UK-focused oil firm will retain its interest in the Fyne and Erne licences, along with a licence in Ireland’s Porcupine basement, if the deal – which remains subject to shareholder approval – goes through.
“The board of directors’ recommendation follows an extensive process by the company to secure additional viable financing needed to meet higher than expected capital costs to complete the Causeway development as well as meet its ongoing Payment and Oil Swap obligations with CS,” the company said today.
“This process was hindered by production interruptions caused by platform shutdowns and ongoing delays in completion of the Causeway electric submersible pump and water injection facilities. These delays further negatively impacted available cash balances as hedged production volumes under the oil swap no longer matched actual production volumes.
“While ESP and water injection facilities are now expected to be operational by early Q2 2014, the operator has incurred further costs at causeway and the company has ongoing debt financing and oil swap obligations, which if not funded, could have resulted in the loss of the asset.”
Antrim admitted late last year it was looking at selling off its stake in Causeway, as mounting costs on the field field – where it held a 35.5% stake after farm-out deals to Ithaca – along with a shutdown of the North Cormorant platform last September left the company facing the possibility of breaching debt covenants.
It looked to have been given a lifeline for its operations after agreeing a deal to amend its payment and oil commodity swap with Credit Suisse, but production on the field had declined to around 3,000 due to ongoing technical problems.
The new sell-off, Antrim said would give the Canadian firm around $18million in working capital and no debt.
Ian Suttie’s First Oil already has stakes in a number of North Sea fields, including the Cormorant East field near Causeway.
Read more analysis on what the deal means for Antrim in tomorrow’s Press and Journal
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